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BJ's takes a bigger slice of casual-dining market

The Huntington Beach-based chain's vast menu and modest prices are helping it thrive after a tough few years for the restaurant industry.

May 05, 2010|By Andrea Chang, Los Angeles Times

Founded by Bill Cunningham and Mike Phillips, two friends from the Midwest, BJ's was originally called BJ Grunts in homage to a casual-dining restaurant in Chicago called R.J. Grunts. But the chain became known simply as BJ's after it received complaints from executives at R.J. Grunts, said Phillips, now 70.

In the mid-1990s, BJ's was sold to two accountants, Paul Motenko and Jerry Hennessy, who introduced larger-format restaurants, big-screen TVs and expanded menu offerings. Today's BJ's menu includes about 100 items.

Its beer selection, a hallmark of the chain, includes seven BJ's brews that are always served on tap, as well as seasonal and craft beers (cocktails and mainstream beer staples such as Bud Light are available too).

Customer favorites include BJ's Jeremiah Red, an Irish-style red ale, and BJ's Piranha Pale Ale, a "hoppy" American-style beer. The chain's signature handcrafted beers are made at several microbreweries and represent about 10% of BJ's sales.

Last month, BJ's reported that first-quarter profit rose 16% to $4.4 million. Revenue at restaurants open at least 18 months, known as comparable-restaurant sales, increased 4.4%, beating the most recent quarterly results at the Cheesecake Factory, California Pizza Kitchen and Brinker International Inc., the parent company of chains including Chili's and Maggiano's Little Italy.

Now, with consumers starting to splurge a bit on dining out and competitors still retrenching, BJ's is being presented with a compelling growth opportunity. But the chain is being cautious in identifying new markets.

BJ's plans to open at least 10 new locations this year, including restaurants in Reno, Tucson and San Antonio. It's also hoping to expand in California, especially in Los Angeles, where Deitchle says the chain is "very bullish."

Investors and analysts are similarly optimistic about the chain's long-term prospects.

"They've got a very attractive and a very portable concept," said Anton Brenner, senior research analyst at Roth Capital Partners, "one that you can stick just about anywhere in the country and it works."

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